Something that many people who rent ask on a regular basis is whether they should rent or buy. People often feel that they are lining someone else’s pockets by renting. And, to an extent, that’s completely true. However, buying a home isn’t for everyone. Let’s take a closer look at whether you should rent or buy a house.
Can You Afford a Home?
People often look at a mortgage payment and think, “That’s not much more than I’m paying now.” What they forget to consider is that you also need to pay for insurance, home repairs, and taxes. When you’re renting a home, you don’t have to worry about those expenses. In some cases, your utilities may even be included in the rent.
Do You Have a Steady Income?
You may have enough money for a down payment and a job that can cover the cost of a mortgage. Unfortunately, if you can’t prove that you have steady income, you may have trouble finding a bank that will give you a mortgage. For example, those that are self-employed often have a harder time getting a mortgage.
Do you Have an Emergency Fund?
Even if you have a down payment and can afford the monthly mortgage payments, you'll want to think twice about buying a house without an adequate emergency fund of at least 3 to 6 months of expenses. You want to have cash ready in case of an emergency like the air conditioning breaking in the middle of the summer or a slab water leak that needs to be dealt with immediately. If you own your home, you can't call the landlord to make repairs. It's all on you to pay for it.
Are You Looking at Long-Term?
While you can easily move to another house when renting, you do not have the same flexibility when owning a home. If you want to be able to pick up and move frequently, it’s best to rent. Renting often comes with a lease, but you can pay out a lease easier than selling a home.
Do You Want to Make an Investment?
People often feel that renting a home is throwing their money away. When you buy a home, you’re making an investment. Once your mortgage is paid, you’ll have something that can be sold at a potential profit.
What you need to keep in mind is that the market is always changing. In other words, your home may lose value and not be worth as much as you paid for it. This can force you to have to stay where you’re at until the market picks up or sell at a loss.
There are reasons to rent and reasons to buy. Unfortunately, just because you want to buy doesn’t mean you can. You need good credit, a steady income, and the ability to afford being a homeowner.
Carefully consider your options before rushing into anything. The other side of the fence may seem better but isn’t always right for you.
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